The Implications of Menarini

1. The Implications of Menarini Marco Bronckers GCLC / 8 December 2011

2. Background Do fundamental rights make a difference for EU competition law? • Old question • New answers after Lisbon?

3. Background (2) • Growing recognition that ECHR was relevant • but was ECtHR case law strictly followed? • now Charter instruction • Growing recognition that comp fines are “criminal” under Art. 6 ECHR • but how “criminal” are they (Jussila 2006) • what are the implications?

4. Jussila para. 43 • While…the requirements of a fair hearing are the most strict in the sphere of criminal law, the Court would not exclude that in the criminal sphere the nature of the issues to be dealt with before the tribunal or court may not require an oral hearing…there are criminal cases which do not carry any significant degree of stigma. There are clearly “criminal charges” of differing weight. What is more, the autonomous interpretation adopted by the Convention institutions of the notion of a “criminal charge” by applying the Engel criteria have underpinned a gradual broadening of the criminal head to cases not strictly belonging to the traditional categories of the criminal law, for example administrative penalties…customs law…competition law…Tax surcharges differ from the hard core of criminal law; consequently, the criminal-head guarantees will not necessarily apply with their full stringency.

5. Menarini judgment • Italian case, relevant to EU law • ECtHR confirms criminal character of comp law fines • ECtHR accepts administrative enforcement, provided “full jurisdiction” of courts to review • ECtHR satisfied with review in this case

6. Criticisms • The dissent: the context suggested too much deference to administration • but see ‘bridging’ concurring opinion • Questions left open: • how stringent will Art. 6 disciplines be (Jussila 2006)?

7. Implications: standard of review • ECtHR: “full jurisdiction” • must cover all points of fact and law • must be able to reformulate (or simply quash?) admin findings

8. Implications: standard of review • Art. 263 TFEU: “legality review” • lack of competence • infringement of an essential procedural requirement • infringement of…any rule of law • misuse of powers

9. Implications: standard of review • Art. 261 TFEU: courts can be given “unlimited jurisdiction” with regard to penalties • Art. 31 Reg. 1/2003: CJEU shall have “unlimited jurisdiction” to review decisions imposing fines; it may “cancel, reduce or increase” fines

10. Implications: standard of review Is there obstacle in the TFEU against “full jurisdiction” required by ECtHR? • certainly not in “unlimited jurisdiction” • but does this cover actual finding of infringement? • probably not in “legality review” • Art. 263 not as restrictive as ECSC-predecessor

11. Implications: standard of review Is there obstacle in the CJEU case law against “full jurisdiction” required by ECtHR? • the problem is “complex economic assessments” • procedural errors • inadequate reasoning • inaccurate statement of fact • manifest error of assessment • misuse of powers

12. Implications: standard of review How to overcome the case law obstacle? • “marginalize marginal review” • reduce number of complex assessments • adapt formula to reflect actual intensity

13. Implications: standard of review New formula? • In a legality review “the Courts cannot use the Commission’s margin of discretion…as a basis for dispensing with the conduct of an in-depth review of the law and of the facts.” • “The review of legality is supplemented by the unlimited jurisdiction…” KME 8 December 2011, paras. 102 & 103.

14. Implications: standard of review Echo of Menarini’s concurring opinion? • “…although the General Court repeatedly referred to the ‘discretion’, the ‘substantial margin of discretion’ or the ‘wide discretion’ of the Commission, including in paragraphs 35 to 37, 92, 103, 115, 118, 129 and 141 of the judgment under appeal, such references did not prevent the General Court from carrying out the full and unrestricted review, in law and in fact, required of it.” KME 8 December 2011, para. 109.

15. Implications: standard of review A more fundamental approach to “full jurisdiction”: • eliminate “complex economic assessments” • is there room for any admin discretion in defining criminal infringements (Art. 6 and 7 ECHR)? • confirm that courts can reformulate infringement findings • make appeals against fines suspensive • also consider presumption of innocence (Art. 6.2 ECHR)

16. Other implications • Menarini underscores direct relevance of ECHR to competition law proceedings • Consideralso other pending cases before ECtHR • Finnish case- questioning absence of cross-examination of witnesses • Dutch case– questioning parental liability presumption

17. Example: parental liability • Parent presumed to be liable for conduct 100% subsidiary (Akzo 2009) • Rebuttal must show no parental influence generally in subsidiary’s conduct • not just in anti-competitive behavior • No rebuttal to date has ever been accepted • Recently, COM’s reasons for rejecting rebuttals have been criticized (Air Liquide, Grolsch, Elf Aquitaine 2011)

18. Example: parental liability (2) • ECtHR case law (Salabiaku 1988) on presumptions: • reasonably serve public policy goal • may not be automatic • effective rebuttals must be available • Compare other instances where corporate veil is pierced (tax; tort; human rights) • unusual • with rebuttals

19. Example: parental liability (3) • Does “economic unit” concept justify exceptional approach in competition law? • Is fine increase proportionate? • Is parental liability as a rule necessary? • In any event: COM to identify acceptable rebuttals

20. Draft, 25 Nov 2011 Conclusion After Menarini, no more business as usual for EU competition law